One of the significant assets acquired by through the Kaoclay acquisition is a large primary kaolin resource in Georgia, U.S. As a result of an aggressive exploration and acquisition program by Kaoclay in the late 1990s, Erdene now controls a large high brightness primary clay resource through its subsidiary, Erdene Materials Corporation (formerly Sparta Kaolin Corporation). Erdene's phase II tested, in-ground, "premium" quality, primary kaolin resource in Georgia amounts to 32.1 million tons. For the project's development stage, Kaoclay partnered with industry leader Huber Engineered Materials (Huber), a subsidiary of J.M. Huber Corporation, a diversified multi-national company and one of the world's largest kaolin producers. Commercial production by Huber from Erdene's primary kaolin deposits began in 2005 under the product name HuberPrimeTM, a high quality light-weight coater product.

In addition to the commercial production with Huber, in October 2007 Erdene Materials Corporation entered into an Option Agreement with Deepstep Kaolin Company LLC, of Georgia, USA to jointly develop a new ceramic clay product line for Erdene’s primary kaolin resources. During start-up, the ceramic clay products are being produced out of Erdene’s industrial minerals laboratory and pilot plant testing facility in Eatonton, Georgia, USA. The ceramic clay market provides an emerging opportunity in North America in the production of high quality porcelain ceramics as clays typically supplying this market from Europe are being depleted. Erdene and Deepstep Kaolin Company have been working with manufacturers over the past 24 months testing various raw material sources in different ceramic and glazing clay applications. Following the Phase I development program, estimated to take 8 months, if Deepstep Kaolin Company decides to take the project to production Erdene will have the option of directly participating in the ownership of the production company and will be paid a royalty for any Erdene kaolin mined for the development of these products.

The Bluenose project located in eastern Georgia includes approximately 11.9M tons of measured and indicated resources of crude in-situ high brightness primary kaolin with a low stripping ratio. Erdene also owns 409 acres including several residences in the Bluenose area with an appraised value of US$1.7M and is considering multiple options to maximize the value of the project.

The company continues to work with Huber, Deepstep Kaolin and other third parties to identify products and markets to increase utilization of the raw material and therefore increase revenues and volumes mined and produced.